Top 100 delinquent taxpayers owe $419M

Amid a crippling state budget deficit and a national debate over raising taxes on the wealthy, the California Board of Equalization has added 16 new companies and individuals to its list of unpaid delinquent sales and use taxes for the fourth quarter of 2011.

According to the tax agency, the newcomers included an oil company, a restaurant, several car dealerships, a financial adviser and an auto repossession service. In total, the newcomers owed a combined $21,169,530.

The top 100 list contains more than $419.5 million in owed taxes.

Last week, Gov. Jerry Brown proposed a ballot initiative that would raise taxes on high-income earners and increase the state sales tax by a half-cent. The proposal would generate an estimated $7 billion per year over five years for education and public safety services.

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"The stark truth is that without new tax revenues, we will have no other choice but to make deeper and more damaging cuts to schools, universities, public safety and our courts," Brown wrote in an e-mail to supporters.

The total amount owed by delinquent taxpayers dwarfs the $333 million the California State University system is asking to have restored to its budget for the 2012-13 year and is enough to cover a semester of tuition at the CSU system for 153,326 students. It also would be enough revenue to offset the planned “trigger cuts” to the CSU and University of California systems, community colleges, various health and human services programs, and public safety programs.

The list has shamed celebrities, as well as average citizens, in the past. Former "Baywatch" star Pamela Anderson was listed as owing $493,144.68 in a version of the list released in April. Halsey Minor, founder of technology news website CNET, and his wife, Shannon, owed more than $13.1 million, according to a tax lien filed July 21, 2009. Both Anderson and Minor are no longer listed as delinquent taxpayers.

The offender owing the most in back taxes is a company called California Target Enterprises Inc. of Downey, which owes nearly $18.4 million and has had an outstanding lien since April 2002. Representatives of the company could not be reached for comment – as the SF Weekly discovered last year, "a call to Target Enterprise's listed number puts one on the line with a polite older woman who insists she's had that number for years – and doesn't owe the state $18.1 million."

This year, Brown signed a new bill, AB 1424, by Assemblyman Henry T. Perea, D-Fresno, which will expand the list further and impose other penalties on tax delinquents. The new law, which goes into effect July 1, will require both the Franchise Tax Board and Board of Equalization to release the 500 largest tax delinquencies. The Franchise Tax Board will publicize the data twice each year, while the Board of Equalization will continue to release updates each quarter.

The Board of Equalization and Franchise Tax Board will, under the new law, be allowed to suspend, revoke or refuse to issue professional or occupational licenses, certificates, registrations or permits to debtors who appear on the list. They also can suspend driver’s licenses for failure to pay taxes.

Opponents, in the Assembly’s analysis of the bill, said that the largest debtors may be able to transfer business licenses to others and that the bill was counterintuitive because business licenses were needed to earn money to pay off debts.

Perea, in a statement, said the bill showed that lawmakers are serious about recouping tax revenues. Tax delinquents “will soon be stepping out of their fancy cars and onto the bus,” the statement said.

“It’s time that the worst tax debtors in our state know we mean business,” Perea said. “Everyone on this list has had a chance to work with the state to resolve their tax issues but have chosen instead to bury their heads in the sand and continue to spend lavishly.”

Tax delinquents can have their licenses restored after they make payment arrangements with the state or demonstrate a financial hardship, Perea said.

The Board of Equalization began publishing a list of delinquent taxpayers after former Gov. Arnold Schwarzenegger signed a 2007 law, AB 1418. That bill, written by former Democratic Assemblyman Jerome Horton – now the chairman of the Board of Equalization – requires the state to post online the top 250 entities that owe more than $100,000 in delinquent sales and use taxes, along with their last known address, the amount owed and the type of tax owed. The delinquent taxpayer must be notified by certified mail 30 days in advance before the information is made public.

Delinquent taxes that have been settled, are in litigation or under appeal, or are in bankruptcy proceedings are not included.

In a 2006 analysis of the then-pending bill, the Department of Finance warned: “Confidentiality of tax returns is an important feature of the tax system. Breaching that confidentiality may work to undermine the public’s confidence in the tax system.”

But according to the Board of Equalization, since the bill took effect Jan. 1, 2007, it has brought in $5.2 million, and debtors with $43.4 million in tax liabilities have made arrangements to pay their debts, either up front or with installment payments.

The 16 entities added to the top 250 list of delinquent taxpayers are: